About Not-for-Profit Organization Financial Rules

A not-for-profit organization works to achieve a non-financial goal as opposed to one that is designed to make a profit. Churches, charities and philanthropic associations are often not-for-profit organizations.There are certain financial rules that not-for-profit organizations must adhere to.

Annual Reports

Annual reports of some kind are required in all categories of not-for-profit organizations. Annual reports must identically reflect the income, expenses and credits reported to the Internal Revenue Service. Every piece of financially related information regarding the not-for-profit organization must be disclosed in the report. All taxable income as well as the non-taxable items must be clearly disclosed. The public may inspect these reports for up to three years following their publication.

Data Management

Not-for-profit organizations are required to keep meticulous financial records. Each account of financial support including grants, contributions, sponsorships and all forms of revenue must be scrupulously detailed in a hardback ledger as well as a computer program and all handed over to a professional in accounting or bookkeeping. Entries should be made daily and include copies of checks and other documentation available.  All information pertaining to expenditures should also be documented. Utility bills, supply receipts and monthly statements should all be included. An IRS is allowed to ask for these records at any time. 

File 501 Forms

In order to be considered a not-or-profit organization 501 forms must be filed and documented. This allows the organization to take advantage o the tax-exempt status and other tax breaks. They are also eligible for tax-exempt contributions. Other forms must accompany the 501 forms such as the articles of incorporation.